12. Income Taxes

        The benefit and expense for income taxes consisted of the following:

                                                                                                                                                                                    

        A reconciliation of the federal statutory rate to the effective income tax rate is as follows:

                                                                                                                                                                                    

        The components of our net deferred tax assets and liabilities at December 31 are as follows:

                                                                                                                                                                                    

        As of December 31, 2017, 2016 and 2015, our net income tax receivable was $2.6 million, $2.3 million and $2.0 million, respectively, which were recorded in prepaid expenses and other current assets on the consolidated balance sheets. Also, the Company had an AMT credit carryforward that is now refundable under the Tax Act of approximately $1.5 million that is recorded in other assets on the consolidated balance sheet as of December 31, 2017.

        As of December 31, 2017, we had federal operating loss carryforwards and credits of approximately $0.4 million expiring beginning in 2025, and state operating loss carryforwards and credits of approximately $131 thousand, net of federal benefit, expiring beginning in 2035. The Tax Act, reduced the U.S. corporate income tax rate from a maximum of 35% to 21%. As a result of the reduction in the U.S. corporate income tax rate from 35% to 21% under the Tax Act, the Company re-measured its ending net deferred tax assets at December 31, 2017 and recorded a provisional tax expense of $4.8 million that was offset by the release of valuation allowance in the same amount.

        Our ability to realize our deferred tax assets depends primarily upon the generation of sufficient future taxable income to allow for the utilization of the deductible temporary differences and upon tax planning strategies. Realization of net deferred tax assets is dependent on our ability to generate future taxable income, which is uncertain. We have recorded valuation allowances of $10.2 million, $17.3 million and $16.7 million, against our net deferred tax assets as of December 31, 2017, 2016 and 2015, respectively, as we believe it is more likely than not that the assets will not be realized.

        Utilization of the net operating losses and credit carryforwards may be subject to an annual limitation due to the ownership change limitations provided by the Internal Revenue Code of 1986, as amended, and similar state provisions. We have not performed a detailed analysis to determine whether an ownership change under Section 382 of the Internal Revenue Code occurred. The effect of an ownership change would be the imposition of an annual limitation on the use of credits attributable to periods before the change and could result in a reduction in the total credits available.

        The Company has filed previous tax returns whereby a carryforward for orphan drug credits were included. Through December 31, 2017, the Company has still not utilized such credits. As of the filing date of this Annual Report on Form 10-K, the Company was in the process of obtaining documentation and support for these credits. The Company has not included these orphan drug credits in the table above that details out our net deferred tax assets and liabilities due to the lack of support. If and when this documentation or support of the orphan drug tax credit is obtained, we may have the ability to offset future income taxes of up to $71.3 million. This deferred tax asset, had it been recorded, would have had a full valuation allowance against it.

        We are subject to income taxes in the United States and several states. Tax regulations within each jurisdiction are subject to the interpretation of the related tax laws and regulations and require significant judgment to apply. We had tax net operating losses and credit carryforwards that are subject to examination for a number of years beyond the year in which they are generated for tax purposes. Since a portion of these carryforwards may be utilized in the future, many of these attribute carryforwards remain subject to examination.

        Our policy is to recognize interest and penalties related to income tax matters in income tax expense. Interest and penalties related to uncertain tax positions of $34 thousand, $31 thousand and $112 thousand were recognized during the years ended December 31, 2017, 2016 and 2015, respectively related to state tax nexus issues. As of December 31, 2017, 2016 and 2015, accrued interest and penalties were $176 thousand, $142 thousand, and $112 thousand, respectively, and are recorded as other long term liabilities on the consolidated balance sheets. As of December 31, 2017, our total unrecognized tax benefits would favorably affect our effective tax rate if recognized. We do not believe it is reasonably possible that the amount of unrecognized tax benefits will materially change within the next 12 months. We file income tax returns in the United States and various state and local jurisdictions and remain subject to examinations by these jurisdictions for years 2005-2017.

        The aggregate change in the balance of unrecognized tax benefits, (which includes the $71.3 million orphan drug credits on our tax returns as discussed above for all periods), and which excludes interest and penalties is as follows: